Soup Restaurant wins lease lawsuit against Dian Xiao Er

Soup Restaurant has won its lawsuit against Dian Xiao Er over 69 sq m of shop space - part of its outlet at the VivoCity mall that Soup had sublet to its next-door neighbour.

In a written judgment yesterday, the High Court agreed with Soup Restaurant that the sublease was terminated in October 2012.

Hence, Dian Xiao Er had wrongfully remained on the premises.

This means Dian Xiao Er owner - YES F&B - will have to pay damages. The amount of damages - which can include rent, potential loss of profits, and interest - will be assessed in a separate hearing.

The two outlets leased their premises at the mall separately from the landlord, VivoCity.

On Oct 19, 2009, Soup signed a three-year lease with the landlord.

On the same day, it sublet 69 sq m of its premises to Dian Xiao Er, its subsidiary at the time, which wanted the space to expand the dining area and kitchen.

In June 2012, the married couple that founded Dian Xiao Er bought over Soup Restaurant's stake in YES F&B to settle a court spat. This meant that Soup Restaurant was no longer Dian Xiao Er's parent company.

On Oct 1, 2012, Soup told Dian Xiao Er to vacate the sublet space by Oct 6. On Oct 18, when Soup's lease expired, it signed a new lease with the landlord.

Represented by Mr Edwin Tong, it later sued Dian Xiao Er for damages and to take possession of the sublet space.

Dian Xiao Er contended that it was entitled to stay for another three years. But in May this year, the restaurant offered to hand over the sublet area. This was accepted by Soup in September.

The dispute hinged on the interpretation of the sublease.

Soup contended that the sublease expired on Oct 18, 2012 when its "head lease" with the landlord came to an end.

Dian Xiao Er contended that the sublease was three years with an option to renew for another three years.

It argued that the sublease was not terminated because, just like the head lease, it was "automatically renewed".

Judicial Commissioner Edmund Leow rejected Dian Xiao Er's argument.

The new head lease cannot be seen as a continuation of the previous one, he said, noting that Soup Restaurant's new lease with the landlord has different terms.

He added that Dian Xiao Er's interpretation of the terms in the sublease was "one-sided and commercially unreal".

He did not find Dian Xiao Er founder Yik Kuen Koon a credible witness as his testimony kept shifting, making it "difficult to discern a consistent and coherent position".

This article was first published on November 25, 2014.
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